* ADM earnings fall in quarter ended June 30
* Delayed U.S. harvest will keep corn, soy supplies tight
* GrainCorp deal on track to close by end of year -CEO
By Tom Polansek
CHICAGO, Aug 6 (Reuters) - Archer Daniels Midland Co , one of the world's top agricultural trading houses, on Tuesday warned that a delayed U.S. corn harvest will prolong the hardship of the drought that devastated crops last year.
ADM said that ongoing tightness in crop supplies will make for a challenging third quarter after it reported on Tuesday lower earnings in the second quarter ended June 30.
The company and its rivals, such as Bunge Ltd, are anxiously awaiting the start of the autumn harvest in the United States, the world's top grain exporter, to replenish low inventories of corn and soybeans following two years of poor crop weather.
But, that harvest will begin weeks later than normal because cool, wet weather delayed planting in the spring.
"We've had two substandard crops and this is a recharge that is just essential for ADM," Chief Risk Officer Craig Huss said about the upcoming harvest.
ADM is among the four large players known as the "ABCD" companies that dominate the flow of agricultural goods around the world. The others are Bunge, Cargill Inc and Louis Dreyfus Corp.
Farmers in the U.S. Midwest will begin harvesting the current corn crop in mid to late September. Ethanol and livestock producers need corn soon as inventories of the grain are set reach a 17-year low by the end of the month.
The late harvest means the third quarter, which will run through September, "presents a lot of challenges" for ADM, which profits by buying, selling, transporting and processing crops, Chief Operating Officer Juan Luciano said.
"We will not see the full relief of the harvest yet," he told analysts on a conference call.
Grain traders must be cautious ahead of the harvest so that they do not have too much high-priced corn left over from previous harvests when cheaper new-crop corn becomes available.
September corn on Tuesday traded around $4.75 a bushel at the Chicago Board of Trade, while new-crop December corn was near $4.58.
"We have to manage this inverse carefully," Luciano said about the price difference, noting that ADM employees have "done a good job of reducing inventories."
While farmers may be reluctant to sell their newly harvested corn because prices have dropped 20 percent since the beginning of June, ADM's Huss, who is retiring from the company after 37 years, said there will be plenty of corn to process and trade because it will be a huge crop.
The U.S. Department of Agriculture estimates corn production at 13.95 million bushels, up 29 percent from last year.
ADM reported net earnings of $223 million for the second quarter, or 34 cents a share, down from $284 million, or 43 cents a share, for the same quarter a year ago.
Adjusted earnings were 46 cents a share, above the 44 cents expected by analysts.
Revenue was $22.54 billion, below Wall Street's expectations of $22.87 billion, according to Thomson Reuters I/B/E/S. Revenue a year earlier was $22.68 billion.
"Overall, ADM had a decent quarter with some puts and takes," JP Morgan analyst Ann Duignan said, noting earnings were down for grain handling but up for ethanol.
In July, Bunge reported earnings for the quarter that ended June 30 of $110 million, down 58 percent from a year earlier, due to tight crop inventories.
Cargill is set to report earnings on Wednesday.
GRAINCORP, COCOA DEALS
ADM is on track to complete a deal by the end of the year to buy Australia's GrainCorp Ltd for nearly A$3.0 billion ($3.1 billion), Chief Executive Patricia Woertz told analysts.
The takeover, announced in April, is the latest move in the rapid consolidation of the global grains sector amid intense competition to feed fast-developing countries like China.
ADM also is exploring a sale of its cocoa business, which lost money in the second quarter. Woertz said it would be "premature" to comment on a potential deal.